Growth rates fall in Latin America and the Caribbean: UN

January 16th, 2009 - 7:00 am ICT by IANS  

Mexico City, Jan 16 (DPA) The economies of Latin America and the Caribbean would experience slower growth rates in 2009, according to a report that the UN made public Thursday.”Economic growth in Latin America and the Caribbean is expected to slow markedly in 2009. The key drag is the fall in commodity prices. In addition, domestic credit is expected to tighten in many economies. Inflationary pressures, which surged during 2008 owing to the increasing costs of energy, transportation and food, should decelerate in 2009,” the document says.

The document, under the title World Economic Situation and Prospects 2009, says Mexico and Central America are set to suffer most from the current slump, in light of their close ties to the US economy. The UN expects them to show a combined growth of 0.9 per cent, with relation to the 2.2 percent growth of 2008.

“The subregion will be directly hit by the recession in the United States, which provides the market for most of its manufactured exports and jobs for its migrant workers.”

The study estimates that South America’s GDP, in turn, will grow by 2.9 percent this year, in comparison to the 5.4-percent growth of 2008.

“Lower commodity prices will negatively affect the terms of trade. In addition, domestic demand will slow because of tighter financing conditions, as has already become evident in Brazil during the last quarter of 2008.”

The rise in unemployment is set to revert the positive trend of recent years, when employment quality had improved and the unemployment rate had fallen to 7.5 percent, the UN noted.

The document estimates global inflation of 7.3 percent in 2009, compared to 8.1 percent last year.

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